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Update: Problem Resolved.
After posting this I logged off, this morning I attempted to invite the external user again and the system let me. The warning label now said "User is external". I'm not sure if the system just needed some time to update or what. But it works now and I can add external users.
I am unable to share or grant permissions to a user outside of my org. He was able to use and interact with the whiteboard during the meeting but I could not add him via the share button, nor could I grant his the request through email.
I went through every support request document I could find. -Like this one: Zoom Community: Sharing zoom whiteboard outside my organization. and many others.
And made these settings changes under account settings (under admin)
I even created a group and added the entire team to the group. Then I went to that group - whiteboard - and made the above setting changes under the group.
So now I've gone back to try to add this external user to both an existing whiteboard AND a new whiteboard and neither will allow it to proceed. So I kept tinkering with the settings and I have no idea what I did but now it actually lets me click the external users button now.
But when I go to add the user it says board owner has disable collaboration.
This process has taken a lot amount of time, only to have it not work. I wish there was an indicator that an Admin couldn't do this if there was a Board Owner barrier in place.